Special Report: President Clinton Visits Appalachia

by James E. Casto

Not every American factory gets visited by the president of the United States, but then Mid-South Electrics isn't just any factory. The state-of-the-art electronics plant in tiny (population 490) Annville, Kentucky, is a visible symbol of what can be achieved when government and private enterprise are willing to roll up their sleeves and work together.

"Success breeds success," says a proud Jerry Weaver, Mid-South's founder and board chairman, as he offers a hope that what his company has accomplished can be an inspiration—and a model—for other communities.

And so, when President Clinton decided to undertake a personal tour aimed at stimulating new investment in some of the nation's worst pockets of poverty, an inspection visit to the Mid-South plant in Jackson County, Kentucky, became a key stop on the first day of his four-day, six-state tour.

Dubbed a "domestic trade mission," the presidential trip was designed to draw national attention to a new program crafted by the Clinton White House—the New Markets Initiative.

Underlying the new program: a growing realization that while the nation's economy is booming, not all Americans are enjoying that boom. U.S. wages are rising and welfare rolls are shrinking. Nationwide, unemployment has dropped to 4.3 percent, the lowest it's been since 1970. Even so, there are too many locales in America where unemployment is too high and opportunity too scarce.

Many urban and rural areas continue to be held back by a lack of jobs, underemployment, poor housing, inadequate public services, and, significantly, by a chronic shortage of the kind of private investment capital needed to stimulate and support community development.

Many of those Americans who remain virtually untouched by the current economic boom call Appalachia home.

Since the creation of the Appalachian Regional Commission (ARC) in 1965, the Region has seen dramatic progress. New roads, schools, health care facilities, water and sewer systems, and other improvements have brought a better life to many Appalachian residents.

In 1960, 219 counties in the 13-state Appalachian Region were considered economically distressed. Now that list has been cut in half, to 108 counties, but these are "hard-core" pockets of poverty, seemingly oblivious to all efforts at improving their lot. Trimming more counties from that list will, more and more agree, require new weapons and new tactics. Weapons and tactics like those represented by President Clinton's New Markets Initiative.

Calling the president's new program "crucial to the success of long-term economic development issues in rural America," ARC Federal Co-Chairman Jesse L. White Jr. hailed the president's decision to visit a region "historically exploited, largely overlooked, but extremely anxious to more fully participate in the economic mainstream of the country."

Yes, poverty was a factor in deciding the stops on the presidential itinerary, says White House Deputy Chief of Staff Maria Echaveste. But, she says, the president also was determined to visit "places where there were signs of hope, where there is some development."

Mid-South, a growing manufacturer of electronic components for the U.S. Department of Defense and a long list of Fortune 500 companies, perfectly fit that bill.

Thus, on a steamy July 5, Clinton flew into Lexington, Kentucky, aboard Air Force One, then helicoptered via Marine One to Tyner, Kentucky, where he landed at an elementary school and drove into the Whispering Pines community, a cluster of small trailer homes with about 100 residents.

There, the president—his jacket off and his tie loosened—sat briefly and visited with 69-year-old Ray Pennington, who suffers from emphysema and must keep a portable oxygen tank at his side. Pennington's daughter Jean Collett told Clinton that since she had to quit her job at the Dairy Queen to care for her recently widowed father, the family relies heavily on her son-in-law's paycheck from the nearby Mid-South plant.

During the brief drive to the plant, Clinton startled onlookers by twice stopping the small motorcade and getting out and shaking hands, first at the Annville Stop-N-Go, on Highway 30, then again at the Annville Auto Mart, across the road only a few yards from the plant driveway.

"I know you all have been out here in this hot sun. I wanted to stop by and say hi," he said.

At the handsome brick structure that houses Mid-South, the president chatted briefly with workers, along with local political and economic leaders, including members of the Kentucky Highlands Investment Corporation, which has worked closely with Mid-South.

Then it was back aboard Marine One and on to Hazard, Kentucky, where a hot but patient crowd—estimated at 5,000—had filled Main Street, waiting to catch a glimpse of the president.

"I'm here to make a simple point," Clinton told the enthusiastic crowd. "This is the time to bring more jobs and investment to parts of the country that have not participated in this time of prosperity. Any work that can be done by anybody in America can be done in Appalachia."

From Hazard, Clinton helicoptered back to Lexington, boarded Air Force One, and flew to Memphis.

Following the president's day in Kentucky, his cross-country tour took him to the Mississippi Delta, then to East St. Louis, an urban Empowerment Zone; the Pine Ridge Indian Reservation in South Dakota; South Phoenix, a predominantly Hispanic area in Arizona; the Watts area of Los Angeles; and, finally, to Anaheim, California, where he delivered a speech to business leaders encouraging them to make investments that help poor young people.

A New Sense of Cooperation

From Annville to Anaheim, the president's message was the same: hard-pressed communities need new tools—and a new sense of cooperation between government and business.

"We should have a partnership between government and the private sector that would literally empower people to change the dynamics of their lives," he told the cheering crowd on Hazard's Main Street.

That kind of partnership, local officials say, is exactly what the Kentucky Highlands Investment Corporation has been pioneering.

"For 30 years, Kentucky Highlands has been working hard to boost economic growth in our region, foster new businesses for our communities, and create jobs for our people," says Kentucky Representative Hal Rogers. "Not only has it benefited the economy of our region, but it has created hope and opportunity for the people who live here."

Hal Wilson, vice president of homeownership for the Local Initiatives Support Corporation, the nation's largest community development support organization, calls Kentucky Highlands "one of the best community development corporations in the country."

In 1994, Kentucky's Jackson and Clinton Counties and a portion of Wayne County were designated as one of only three rural federal Empowerment Zones in the nation, bringing the counties $40 million for programs aimed at rebuilding the economy and improving the quality of life. Kentucky Highlands administers the zone.

New businesses financed in part through the zone have created 1,900 new jobs and committed to an additional 1,300 positions;

Other new manufacturers in the zone have created another 350 jobs;

Two major employment training centers have been established;

An entrepreneur training program has been started;

Two hospitals have been expanded;

Schools have been given 700 donated computers;

Jackson County's first residential natural gas system has begun operation; and

Water service has been extended to more than 2,000 additional households.

Loans obtained through the Empowerment Zone have helped fuel the growth at Mid-South Electrics, which has grown from 500 employees when the zone was announced to 850 and is still growing. A $6 million expansion that will enable the company to add another 100 to 150 employees was completed in June.

"The Empowerment Zone did its thing," says Mid-South's Weaver, noting that a tax credit worth about $300,000 per year also was a major factor in the new expansion, providing him with the confidence to go ahead.

Governor Patton voiced a hope that the president's visit will help acquaint the nation with opportunities in the Region. "While Americans look around the world for investment markets in China, Africa, and other developing parts of the world, we hope they also will take notice of untapped 'new markets' such as Appalachia that are within their own country."

Rewards for Investing at Home

In his remarks in Hazard, Clinton noted that for years, American companies have been rewarded by the federal government for investing in untapped markets overseas. Now, he said, he wants Congress to enact legislation granting companies those same benefits and bonuses for investing at home.

Overall, the New Markets Initiative includes several different programs aimed at encouraging corporations to invest more than $15 billion in poor rural and urban areas over the next five years.

Local leaders in Appalachia were quick to praise the initiative and its system of tax credits, subsidies, and loans, saying it will give them another useful tool to help build their economies and their communities.

"I'm sure it will help us," says Gordon Lambert, president of the McDowell County Commission in West Virginia. "We have a good labor force, but a lot of our people had to move away for work. If we had jobs, our people could come back. They could come home." McDowell has been hard hit by cutbacks in the coal industry.

Representative Ted Strickland, of Ohio, said he believes these programs and others have the potential to significantly help poor communities in his congressional district and the entire Appalachian Region.

"If we can make certain benefits for corporations who work in Third World countries, why not make the same initiative for regions in our own country?" he said.

West Virginia Governor Cecil Underwood, who serves as ARC's 1999 states' co-chairman, described the New Markets Initiative as a potential good fit with programs West Virginia is developing to entice businesses to invest and build in the state.

According to the White House, the initiative will use several different programs to invest in Appalachia and other regions:

The New Markets Tax Credit, which would give companies tax credits worth up to 25 percent for investing in rural and urban markets;

America's Private Investment Companies, which would match up to twice the original amount a company invests in a new market, similar to the federal government's plan to encourage overseas investment;

Small business investment companies, which would enable businesses in low- and moderate-income areas to qualify more easily for federal guaranteed loans; and

New Markets Venture Capital Firms, which would provide entrepreneurs with private investment financing and business training "in inner-city and rural areas."

In addition, the initiative will allow the Small Business Administration to create ten new nonbank lenders to give loans to small businesses that otherwise would not qualify for loans, and to invest more money in locally owned banks and financial institutions.

The programs are designed to give companies more security for their investments and give communities something extra when trying to attract economic development.

Much of what Clinton envisions in his New Markets Initiative is contingent on favorable action by Congress.

But corporate executives who traveled with the president on the Kentucky leg of his trip announced a number of immediate private steps. BellSouth announced a partnership with the Kentucky Community and Technical College System to train and place 100 youths in technical and customer service jobs; and Bank One Corporation said it would invest $1 million in a new Appalachian Ohio Development Fund, which will provide financing and technical assistance to small businesses. In addition, First Union pledged to provide at least $5 million for small business equity, micro-loans, and economic development programs in Appalachia.

And the Clinton visit already is bearing its first fruit.

The wheels of Air Force One had hardly lifted from the Lexington runway when Governor Patton announced that Hazard and Pikeville will be getting two new technical-assistance call centers expected to grow more than 800 new jobs.

And Hazard Mayor Bill Gorman said a Michigan businessman who saw Clinton's visit on television had called him and wants to visit. The man owns an aluminum foundry, the mayor said.

"He says his problem up there is, the labor market is so tight that a lot of people just come to work two or three days a week. He asked in depth what the situation was here. I said in Kentucky and West Virginia, we've got good people begging for jobs."

Governor Patton had high praise for Clinton's decision to visit Kentucky. So, too, did most of the average Kentuckians who stood for hours in the near-record heat, waiting for him.

In Hazard, a sun-reddened Donna Boggs of Jenkins, Kentucky, and her 10-year-old daughter, Amanda, said it was worth braving the 95-degree weather to see Clinton deliver a message filled with optimism.

"I loved it. It sounded encouraging for this area," Boggs said. "Enthusiasm is what we need."

Jack Martin of Hazard was also heartened.

"I thought it was to the point," Martin said. "He brought CEOs to let them know we can handle anything. We need an opportunity and a chance."

Valerie Conner, an AmeriCorps volunteer who helped distribute bottled water to the thirsty crowd, brought her twins, Adam and Ashley, with her, saying she wanted them to see the president.

"They'll think, 'When I was 7 years old, I was there,' " she said.

And while waiting for the president in Annville, 11-year-old Sherrie Clemmons said that, even though she's only reached sixth grade, she's already got her career mapped out. She's going to go to college, study computers, and land a job that will enable her to stay and work in Jackson County.

And—who knows?—Maybe she will.

Federal Co-Chairman Sees President's Visit As "High-Water Mark"

For many in the Appalachian Region, President Clinton's historic visit to eastern Kentucky on July 5 was the culmination of a long effort to refocus national attention on Appalachia. No one was more pleased than Appalachian Regional Commission (ARC) Federal Co-Chairman Jesse L. White Jr., who last fall led ARC's successful effort to secure the Commission's first multi-year reauthorization from Congress in nearly two decades.

"Nothing brings focus and attention to an area like a presidential visit," White says. "Now we must capitalize on it." Governor Cecil Underwood of West Virginia, 1999 states' co-chairman, echoes those sentiments: "As ARC states' co-chairman, I welcome the president's visit to Appalachia."

White, who was appointed ARC federal co-chairman by the president, accompanied him on the Kentucky trip. One of his goals has been to rekindle a national commitment to reduce poverty and promote economic development in a region in which one of four counties remains economically distressed. "Part of the challenge has been to restore the standing of the Commission itself, which was battered severely during the 1980s," White says.

"The president's visit was the high-water mark of ARC's efforts to refocus the federal government—and, increasingly, the private sector—on investing in Appalachia," he adds. In April, the White House hosted a high-level meeting with ARC to discuss the president's New Markets Initiative. In May, White and U.S. Secretary of Transportation Rodney Slater convened a major regional conference on intermodal transportation planning in Appalachia. And in August, Department of Housing and Urban Development Secretary Andrew Cuomo convened a two-day Appalachian Summit in Huntington, West Virginia, and Ashland, Kentucky, that included Federal Co-Chairman White, Governor Underwood, Kentucky Governor Paul Patton, and Secretary Slater.

ARC was also a prominent participant this year at national gatherings of federally designated Empowerment Zones, and at Small Business Administration meetings on its small business investment company program. It recently partnered as well with the Federal Deposit Insurance Corporation to promote more small-business lending in Appalachia's economically distressed counties.

"Much of this national focus has resulted from publicity generated by Reverend Jesse Jackson's speaking out on behalf of Appalachia more than a year ago," White says, adding that ARC held a panel on investment opportunities in Appalachia at Jackson's Wall Street Project summit in January, where White introduced the president.

"We have spent the last five years reforming and reinventing ARC to meet the challenges that lie ahead of us in the twenty-first century," White says. "Now we have a national focus on Appalachia not seen since ARC was created in 1965. We must capitalize on it so we can complete the job of bringing all of the Region's 22 million people into America's economic mainstream."

James E. Casto is associate editor of the Herald-Dispatch in Huntington, West Virginia.